Indonesia Economy Forum

[skyhigh88]

REUTERS
MARKET NEWS | Thu Aug 18, 2016 6:09am EDT
Indonesian government approves Newmont Nusa Tenggara deal – official

(Photo from Tempo.co)

Aug 18 Indonesia's government has approved an Indonesian investor group's bid to buy control of Newmont Nusa Tenggara (NNT), which operates the country's second-biggest copper and gold mine, a senior official said on Thursday.

"It has been approved. All the documents have met the requirements," Bambang Gatot Ariyono, the director-general of coal and minerals in the Energy Ministry, told reporters.

A consortium consisting of oil and gas tycoon Arifin Panigoro and banker Agus Projosasmito announced in late June that it will spend $2.6 billion to buy 82.2 percent of NNT.

The Indonesian group, under Amman Mineral Internasional, is buying 56 percent of NNT from U.S. miner Newmont Mining Corp and Japan's Sumitomo Corp and its partners. It will buy the remaining 26.2 percent from local companies. (Reporting by Wilda Asmarini; Writing by Eveline Danubrata; Editing by Christian Schmollinger)

http://www.reuters.com/article/medco-energi-newmont-mining-deals-idUSJ9N18A028

Soon Grasberg??

The Grasberg Mine is the largest gold mine and the third largest copper mine in the world. It is located in the province of Papua in Indonesia near Puncak Jaya which is the highest point between the Himalayas and the Andes, and the highest island peak in the world.

 

[Kalazan]

Wow very good that ST and Pindad will have cooperation since ST Defense have high expertise and experience in defense sector..both on designing, manufacturing and the hitech technological itself.
The match partner!

i always said, asean must collaborated to catched up all defense need among asean countries.
good and strenghten the asean defence cooperation and off course the financial itself.
then increase the asean power.

and the most important is, its must be built on equal dignity and interest between countries.
No place for country that feel stronger...feel richer...feel more expert...but stupid.

 

[afiq0110]

Wow very good that ST and Pindad will have cooperation since ST Defense have high expertise and experience in defense sector..both on designing, manufacturing and the hitech technological itself.
The match partner!

i always said, asean must collaborated to catched up all defense need among asean countries.
good and strenghten the asean defence cooperation and off course the financial itself.
then increase the asean power.

and the most important is, its must be built on equal dignity and interest between countries.
No place for country that feel stronger...feel richer...feel more expert...but stupid.

... but stupid.... ( i can't stop smilling )

 

[skyhigh88]

REUTERS
FINANCIALS | Thu Aug 18, 2016 5:50am EDT
SE Asia Stocks-Rise after Fed minutes; Indonesia posts 16-mth closing high
By Justin George Varghese

Aug 18 Most Southeast Asian stock markets closed higher on Thursday, in line with Asian peers, as risk-taking appetite returned after minutes of the U.S. Federal Reserve's July policy meeting indicated a rate hike is still some way off.

Fed policymakers agree that more economic data is needed before raising rates, although some see a need to tighten policy soon, the minutes showed. "Although uncertainty prevails among investors with regard to the timing of the next rate hike, the likelihood of it being in September has significantly reduced," said Samantha Wee, a trader with CLSA Singapore Pte Ltd.

MSCI's broadest index of Asia-Pacific shares outside Japan rose as much as 0.76 percent in its biggest rise since Aug. 8.

Indonesian shares rose 1.7 percent and posted their highest close since April 2015, with consumer stocks accounting for more than half of the rise.

PT Hanjaya Mandala Sampoerna Tbk and PT Astra International Tbk were among the top percentage gainers.

Thai shares jumped 1 percent and posted their first gain in four sessions, driven by industrials.

Philippine shares eked out small gains after data showed second-quarter annual economic growth picked up to 7.0 percent from 6.8 percent in January-March.

The Philippine central bank said it does not expect increased spending by the government to push inflation higher significantly, and saw no need for monetary policy adjustments.

LT Group Inc and Universal Robina Corp were the top performers.

Malaysian shares closed marginally higher, while Singapore posted its sixth straight session of losses, dragged down by consumer goods stocks.

SOUTHEAST ASIAN STOCK MARKETS
Change on 0930 GMT

Market / Current / Prev. close / Pct Move
Singapore / 2836.98 / 2843.35 / -0.22
Bangkok / 1547.01 / 1531.63 / 1.00
Manila / 7952.81 / 7946.19 / 0.08
Jakarta / 5461.45 / 5371.846 / 1.67
Kuala Lumpur 1694.87 1694.32 0.03
Ho Chi Minh 660.65 660.51 0.02

Change this year

Market / Current / End prev yr / Pct Move
Singapore / 2836.98 / 2882.73 / -1.59
Bangkok / 1547.01 / 1288.02 / 20.11
Manila / 7952.81 / 6952.08 / 14.39
Jakarta / 5461.45 / 4593.008 / 18.91
Kuala Lumpur / 1694.87 / 1692.51 / 0.14
Ho Chi Minh / 660.65 / 579.03 / 14.10

(Reporting by Justin George Varghese in Bengaluru; Editing by Subhranshu Sahu)

 

[CountStrike]

COMMENTARY: Worrying signs for Indonesia’s export growth
Hendarsyah Tarmizi | Jakarta
Fri, August 19 2016 | 09:15 am

Jakarta's Tanjung Priok port on Dec. 28, 2015. (JP/Wienda Parwitasari)
Indonesia’s monthly exports suffered a sharp decline in July, reversing the upward trend of the previous month. The fall also indicates that the series of economic policy packages introduced since September last year has yet to bring a positive impact on the country’s export performances.

According to the Central Statistics Agency (BPS), Indonesia’s monthly exports plunged 26.67 percent in July to US$9.51 billion, the lowest level recorded since 2009. The plunge occurred following a 12.18 percent increase in June, which many trade analysts previously predicted would become the turning point in the trend of the country’s export growth.

Meanwhile, the monthly non-oil and gas exports, which accounted for about 90 percent of the total, dropped 27.75 percent to $8.52 billion last month. On an annual basis, exports in July dropped by 15.22 percent to $8.52 billion from the export figure recorded in the same month last year, while the cumulative exports in the January-July period reached a total of $79.08 billion, a 12.02 decline year-on-year.

Trade analysts have mostly estimated that the growth momentum in June will continue in the following months, as demand from overseas buyers is expected to increase. However, in reality, the global demand remained weak, with exports from Indonesia’s main buyers such as China, the US and Japan further falling.

In addition to the weak global trade, BPS said that the shorter working time in the month had also contributed to the worsening of the country’s export performance. According to the BPS, exports were seasonally lower in July because of a shorter working period during the month. Last month, there were only 16 effective working days because of the public holidays entailed in the Idul Fitri celebrations.

It is true that for the past several years, monthly trade in July has always been lower than the previous month. But the decline in this July was far lower than 15.5 percent in 2015 and 8 percent in 2014.

With the fewer working days, the fall in the exports could not be avoided, but this should not be taken as the main reason behind the massive drop.

If we observe our bilateral trade with major trading partners, the declines in the monthly exports figures were quite worrying.

Exports to the US, for example, dropped by $633.8 million (39 percent), to Japan by $425.4 million (34.11 percent), to China by $306.3 million (25.07 percent), to Singapore by $240.2 million (29.45 percent), to Malaysia by $159.5 million (30.28 percent), to India by $121 million (15.63 percent), to South Korea by $118.2 million (24.51 percent), to Thailand by $112.6 million (26.71 percent), to Germany by $72.1 million (30.06 percent), to Taiwan by $33.1 million (16.02 percent) and to the Netherlands by $8.5 million (3.31 percent).

The only exports that saw increases were to Australia, by $87.8 million (44.34 percent), and to Italy, by $2.4 million (2.03 percent). Total exports to the 13 main trade partners dropped by 26.31 percent.

The sharp drops in exports to the country’s major trading partners were apparently caused by the inability of the country’s goods, especially industrial products, to compete in the global market. The sharp decline should, therefore, receive special attention from related government offices, especially the industry and trade ministries, which are directly responsible for the country’s international trade.

The sharp drop in July’s exports could also indicate that the government’s series of policy packages launched since September last year has failed to materialize as expected.

As part of efforts to stabilize the country’s economy, President Joko “Jokowi” Widodo’s administration has introduced 12 economic policy packages since September last year.

The economic packages are mostly intended to accelerate the country’s economic recovery through deregulation, improving the ease of doing business, removing business uncertainty and improving legal enforcement.

There are also special incentives given to labor-intensive industries so as to enable them to lower operating costs. Medium-sized and small companies are also given cheaper loans to enable them to increase their production. With such incentives, the government hopes that domestic companies, especially those oriented toward exports, will be able to better compete in the global market.

However, the reality is often much different from the expectation. The series of economic packages has not yet borne fruit. It is therefore imperative for the Investment Coordinating Board (BKPM) and the trade and industry ministries to evaluate and reassess the implementation of the economic policy packages.

In previous newspaper reports, many investors complained that they were unable to benefit from the incentives as a result of the strict requirements being imposed.

Besides this weakness, most of the incentives and the facilities given under these policy packages are often too general, as they are not specifically intended for certain export-oriented sectors. The country’s manufacturing sector, which contributes about 75 percent of total exports, should receive special attention, given its important role in the country’s international trade.

The government has revised this year’s export growth target to 0.1 percent from 2.2 percent previously amid the uncertainties in the global economy. Last year, exports of goods and services dropped by 2 percent.

It is certainly not business as usual, with no signs of recovery yet in the world economy, at least until the end of this year. Extra efforts should therefore be taken to prevent the country’s exports from falling any further.
___________________________________

The writer is a staff writer at The Jakarta Post

 

[CountStrike]

Unconducive policies hinder industrialization efforts

• Dewanti A. Wardhani and Prima Wirayani
  The Jakarta Post
• Jakarta | Fri, August 19 2016 | 09:37 am

Despite Indonesia’s vast potential to become a global industrial powerhouse the country’s industrialization efforts are being stymied by unhelpful policies and an unfavorable business climate, a senior economist has warned.

World Bank Indonesia lead economist Ndiame Diop said the declining contribution of manufacturing industry to the nation’s GDP had been caused by a combination of dependency on commodities and unconducive policies.

“For the sake of jobs, GDP growth, and reducing poverty, reviving manufacturing growth is important,” Diop told a media roundtable on Thursday, urging the government to abolish regulations and practices that increase logistics and doing-business costs, to nurture Indonesian manufacturing, which has the potential to become a global powerhouse.

Prior to the government’s economic stimulus packages that have been rolled out since 2015, Indonesia had more than 150 restrictive measures on trade and investments, according to data from Global Trade Alert. President Joko “Jokowi” Widodo’s administration has announced 12 policy packages to cut red tape, spur investment and stoke manufacturing industry since September last year.

The contribution of local manufacturing industry, a sector that contributes most to the country’s economy, has declined to 20.48 percent of GDP recently from 30 percent in 2009 and 23.7 percent when Jokowi took office at the end of 2014.

The problems lie largely in infrastructure bottlenecks that make it expensive to produce locally and tariffs that discourage manufacturers from producing more for export, industry players say.

In the automotive industry, expansion has been restricted by the high luxury tax for SUVs and sedans, making Indonesia uncompetitive compared with other countries, Association of Indonesian Automotive Manufacturers (Gaikindo) co-chairman Jongkie Sugiarto said.

For example, automotive firms invest in Indonesia for MPV cars — models which have limited global demand — but run to Thailand to produce SUVs, sedans and pick-up trucks, which are more commonly used globally. As a result, Indonesia is a production base for local demand, while Thailand enjoys a more global market.

“Foreign automotive firms prefer investing in Thailand because Indonesia’s luxury tax on SUVs and sedans are high. Of course, firms look at local demand before exporting, and local demand for such models isn’t favorable due to the high tax,” Jongkie said over the phone on Thursday.

Meanwhile, the Indonesian Shoe Manufacturing Association (Aprisindo) said the local footwear industry, despite having the competitive edge of low labor costs and a plentiful workforce compared with the rest of the world, faced difficulties in terms of infrastructure bottlenecks and long customs clearance, which added to high logistics costs.

Indonesia’s high logistics costs are considered a major impediment to the nation’s competitiveness and economic growth, accounting for 26 percent of GDP, double those of Singapore and Malaysia.

Despite unfavorable conditions, Diop said many industries still performed quite well, such as footwear, vehicle tires, cars and pharmaceuticals.

He suggested several key reforms that Indonesia should pay attention to in order to create a friendly business climate for manufacturing: First, keep inflation lower than in trading partners. Second, reduce logistics costs, and improve inefficient port operations, ease entry barriers and port-to-factory linkage as well as traffic congestion.

The government, with the help of the National Economic and Industry Committee (KEIN), is currently designing an industrial road map which seeks to end reliance on imports and give a boost to the local manufacturing industry.

Indonesia’s economy is more than 50 percent driven by consumer spending, a hefty proportion of which is supplied by imported goods.

Industry Minister Airlangga Hartarto promised that his office would encourage existing businesses to expand and benefit from the country’s vast market, while thoroughly examining the industry’s value chain structure to find and eliminate problems together with the Investment Coordinating Board (BKPM).

“We will boost upstream, intermediary and downstream industries,” he said. “We are assessing incentives, such as tax allowances, required by the intermediary industry.”

--------------

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[Nike]

Indonesian exports mostly is commodity based products like Palm oils, coffee, tea and among other the declines is in conjunction with the decreasing demands from other countries, especially China and Japan. But worrying not, Indonesian technological and value added products actually increasing, you just can check it through BPS websites

Proposal to bring back GBHN needs serious study: VP
Kamis, 18 Agustus 2016 20:28 WIB | 769 Views

Vice President M. Jusuf Kalla (JK). (ANTARA)

Jakarta (ANTARA News) - Vice President M. Jusuf Kalla (JK) has said the proposal to bring back State Policy Guidelines (GBHN) needs serious consideration.

According to him, GBHN used to be the reference for the direction of the 1945 Constitution.

"Based on past experience, GBHN contains norms only and the proposal to bring it back should be studied seriously," the vice president remarked at a ceremony to mark the Constitution Day here on Thursday.

Jusuf further stated that the 1945 Constitution is a very dynamic constitution that follows needs and current development. This is evident from the several amendments that exist.

"The founding fathers of this nation had drawn up the 1945 Constitution, which is very dynamic and in accordance with needs, and therefore its amendment is always open," he said.

The vice president also explained that the discourse to bring back GBHN as a basic policy is certainly good for achieving the goals of the state, but it needs a national consensus.

Jusuf acknowledged that every nation has its own need and experiences that change dynamically.
(Uu.O001/INE/KR-BSR/A014)

Indonesian exports mostly is commodity based products like Palm oils, coffee, tea and among other the declines is in conjunction with the decreasing demands from other countries, especially China and Japan. But worrying not, Indonesian technological and value added products actually increasing, you just can check it through BPS websites

Proposal to bring back GBHN needs serious study: VP
Kamis, 18 Agustus 2016 20:28 WIB | 769 Views

Vice President M. Jusuf Kalla (JK). (ANTARA)

Jakarta (ANTARA News) - Vice President M. Jusuf Kalla (JK) has said the proposal to bring back State Policy Guidelines (GBHN) needs serious consideration.

According to him, GBHN used to be the reference for the direction of the 1945 Constitution.

"Based on past experience, GBHN contains norms only and the proposal to bring it back should be studied seriously," the vice president remarked at a ceremony to mark the Constitution Day here on Thursday.

Jusuf further stated that the 1945 Constitution is a very dynamic constitution that follows needs and current development. This is evident from the several amendments that exist.

"The founding fathers of this nation had drawn up the 1945 Constitution, which is very dynamic and in accordance with needs, and therefore its amendment is always open," he said.

The vice president also explained that the discourse to bring back GBHN as a basic policy is certainly good for achieving the goals of the state, but it needs a national consensus.

Jusuf acknowledged that every nation has its own need and experiences that change dynamically.
(Uu.O001/INE/KR-BSR/A014)

 

[Robin Wong]

^^ Nah.. Australia is the most popular country for indonesian student and also parents who sent their child to study. Aussie is much closer than US or Europe, so it makes mommy and daddy feel less worried about their daughter. Oz is very expensive both in tuition fee and living costs, however students are allowed to work up to 20 hrs per week. I have friends in Oz that work in McD and they said it was quite nice to increase their allowance. In addition, my friend as an intern who work full time can earn around 22 dollars per hour!

Most of the student can obtain their bachelor degree around 3-3.5 yrs. Based on my experience, I believe around 80% of my schoolmates choose to study business, accounting, finance etc here. Also, searching for permanent resident after graduating from school is quite common for Indonesian student. Note that the admission rate is much less competitive.

The parents only send their children to malaysia for fulfilling old saying "yang penting kuliah di luar negeri." I don't have to translate that, do I?

UNESCO publishes data on the Global Flow of Tertiary-Level Students. According to their data, which was updated in May 2015, the top destinations for Indonesians who study abroad (estimated at 59,000) are:

1. Australia (24.2%)
2. United States (18.8%)
3. Singapore (15.9%)
4. Malaysia (6.9%)
5. Japan (5.7%)
6. United Kingdom (4.2%)
7. Germany (4.0%)
8. Saudi Arabia (3.1%)
9. Turkey (3.0%)
10. Netherlands (2.3%)

 

[Kalazan]

Where is malonsia universiti...?
Again....they feel....rrrr

Singapore...taiwan...korea..australia strongly to snatch new student from indonesia. They need high quality young student from indonesia..., and for their quality the real education environment are needed..not fake .

 

[UMNOPutra]

Where is malonsia universiti...?
Again....they feel....rrrr

Singapore...taiwan...korea..australia strongly to snatch new student from indonesia. They need high quality young student from indonesia..., and for their quality the real education environment are needed..not fake .

If you have money (I doubt you have it) .. you can go to Malaysia to strudy in our best universities to widen and open your "narrow minded" .. And if you have no money and job .... you can go to Malaysia as TKI .. So, you can earn money to feed your family in Indonesia ....To send your kids to go to school ... That is better for you ...

Don't be ashamed because there are 3-5 million Indons live in Malaysia ..

 

[Kalazan]

Widen your mind...from 'Umno brain '. Just narrow as it is..., like your all reply that always give non linear and stupid answer. hihihi

I'm so sorry , our university is my first priority, malons university are fifth...for high rank university i will go to western.

even i have no money and job i will stayed...malonsia nothing important for me. i can go to advanced country with my skill... skilled indonesian will not go to malonsia

Dont be stupid...malon need them. without them your country will stopped.
(dont be ashamed...think wider, are you clever enough? )

 

[skyhigh88]

Indonesia Finance Minister Warns Tax Dodgers: Join Amnesty or Face 'Hell'

Fortune.com
AUGUST 19, 2016, 4:34 AM EDT

“This is the opportunity for you to go to heaven with only 2% (tax penalty).”

Indonesian Finance Minister Sri Mulyani Indrawati warned tax dodgers that an eight-month tax amnesty program was their last opportunity to have all of their “sins deleted” or face “hell” afterwards.

In her first interview with the foreign media since returning as minister, the former World Bank managing director also told Reuters on Friday her top priorities were restoring credibility in the state budget and improving investors’ confidence in the economy.

The 53-year-old Indrawati, named finance minister in last month’s cabinet reshuffle, said revenue collected so far from the tax amnesty was less than expected, only a tiny fraction of the billions of dollars the government hopes will go into state coffers to narrow substantial fiscal deficit.

To people who owe taxes, she offered a choice: “Basically you have heaven and hell. This is the opportunity for you to go to heaven with only 2% (tax penalty) and all of your sins have been deleted.”

See also: Indonesia’s Tax Amnesty Will Likely Form ‘a Bad Dent’ in Singapore

“If you’re not using the opportunity this time, I’m not going to play around,” Indrawati added, warning wealthy business owners that she had “a lot” of video of them admitting they do not pay taxes. Indrawati did not disclose any names.

The amnesty lasts until March and has so far collected only 757 billion rupiah ($57.61 million). That is just 0.5% of the 165 trillion rupiah the government hopes to collect by the end of December.

See also: This Country Was Asia’s Fastest-Growing Economy in the Second Quarter

PAST ENEMIES

In addition, the government hopes that more than $70 billion of assets overseas will return home under the amnesty.

Indonesians can pay the lowest rate of 2% if they enter by Sept. 30. Under current law, the punishment that tax evaders will face after the tax amnesty is a 400% penalty on amounts due.

Indrawati, who has a doctorate in economics from the University of Illinois, said she was “cautiously optimistic” collections will improve after September.

As finance minister under former President Susilo Bambang Yudhoyono, Indrawati made enemies within Indonesia’s elite by naming and shaming tax dodgers.

See also: Indonesia Surprises with Strongest Growth in 10 Quarters

Battered by strong opposition from some Indonesian tycoons, she resigned in 2010 and joined the World Bank.

President Joko Widodo, after his 2014 election, tried to get her in join his initial cabinet, but she declined. Nearly two years later Indrawati -ranked number 37 on the Forbes list of the world’s 100 most powerful women this year – agreed.

Asked why she returned to Indonesia, Indrawati said “I see the momentum of Indonesia’s leadership and it is being managed well. There is a clear intention to improve the performance of the country.”

LACK OF CLARITY

Over the past two years, perceptions had emerged that “all the figures in the budget have been decided in a way that created more questions rather than clarity,” she said.

Indrawati said she expects the economy to grow faster in the second half and post a full year growth of 5.2%, although she admitted that target would be “a little tough” to reach.

“I think that 5.2 is going to be possible but it requires a lot of hard work,” she said. “Demand side growth is still very bullish, inflation is very stable at this very moment and for Indonesia’s history it’s considered very low so that’s going to be something that will provide momentum for the domestic economy.”

“That will require a little bit higher than 5.2%, in the second half, a little bit tough I must say, but we’ll see.”

In the April-June quarter, Indonesia had better-than-expected annual growth of 5.18%. In the first quarter, the pace was 4.92%.

http://fortune.com/2016/08/19/indonesia-tax-amnesty-indrawati-finance-minister/

 

[Kalazan]

Industri Otomotif Nasional Mendapat Tambahan Pasokan Baja

JAKARTA— PT JFE Steel Galvanizing Indonesia siap menyuplai baja untuk kebutuhan sektor otomotif di Indonesia. Pabrik baja tersebut sudah menyelesaikan pembangunan pabrik baja di Bekasi, Jawa Barat Pabrik yang secara resmi akan dibuka 15 September 2016.

“Kami sudah beroperasi, tetapi belum komersial. Nanti kira-kira komersial pada Oktober untuk pelanggan pembuat mobil di Indonesia, khususnya untuk mobil Jepang,” kata General Manager PT JFE Steel Galvanizing Indonesia Musfir di Jakarta, Selasa, 26 Juli 2016.

Musfir mengatakan, material untuk memproduksi baja kebutuhan otomotif saat ini masih diimpor dari Jepang. Spesifikasi baja untuk otomotif agak rumit. “Spesifikasi dari pelanggan sangat ketat sehingga belum bisa disuplai dari lokal. Mudah-mudahan nanti ada perusahaan yang bisa menyuplai material tersebut,” katanya.

Bila material dengan spesifikasi sama sudah ada di Indonesia, JFE akan mengambil material itu dari perusahaan lokal karena diyakini lebih murah di sisi biaya logistik. “Kami menurut rencana memasok ke Daihatsu, Toyota, Suzuki, Mitsubishi, dan Nissan. Jadi, masih sebatas mobil-mobil Jepang,” kata Musfir.

Direktur Jenderal Industri Logam, Mesin, Alat Transportasi, dan Elektronika Kementerian Perindustrian I Gusti Putu Suryawirawan menyatakan, pabrik JFE akan memproduksi baja untuk badan mobil yang selama ini diimpor.

“Dengan berproduksinya pabrik JFE ini, lalu nanti juga beroperasi pabrik Krakatau Nippon di Cilegon, diharapkan impor bisa tergantikan,” katanya.

Sebeluninya, secara terpisah, Presiden Direktur PT Toyota Motor Manufacture Indonesia Masahiro Nonami mengatakan, selama ini industri otomotif masih membutuhkan impor beberapa bahan, seperti resin, karet sintetis, dan baja.

Nilai investasi pabrik itu USD 300 juta (sekitar Rp 3,94 triliun dengan mengacu pada kurs referensi Jakarta Interbank Spot Dollar Rate yang diterbitkan Bank Indonesia pada Selasa). Musfir menargetkan kapasitas produksi mencapai 400.000 ton per tahun. Produksi sampai akhir 2016 diperkirakan sekitar 20.000 ton.

Indonesia memproduksi sekitar 1 juta per tahun dengan kebutuhan baja 600 kilogram baja per mobil. Pemakaian baja dari pabrik tersebut akan menaikkan kandungan lokal mobil yang diproduksi pabrik di Indonesia. “Kami menyuplai langsung dari Bekasi. Selama ini, semua diimpor dari Jepang,” ujarnya. (Kompas)

 

[skyhigh88]

Indonesia’s Indrawati Aims to Build Trust, Boost Tax Revenue
By Yudith Ho; Karlis Salna; Stephen Engle.
August 19, 2016 — 2:54 PM SGT Updated on August 19, 2016 — 4:06 PM SGT

Bloomberg.com

(Jakarta at night by wanderluxe)

• Tackling Indonesia's Tax Shortfall
• Indonesia’s Indrawati Aims to Boost Tax Revenue
• Wants to raise tax-to-GDP ratio to 13.3% from 11% this year
• Those who don’t pay their taxes to face ‘serious action’

Finance Minister Sri Mulyani Indrawati is putting trust-building at the top of her agenda as she tries to get more Indonesians to pay their taxes to raise funds for a massive infrastructure plan aimed at stimulating growth in Southeast Asia’s largest economy.

"My job, first, is to restore confidence in the whole fiscal policy and our budget,” Indrawati said in an interview in Jakarta on Friday. “And that’s why clarity about what is the area of the fiscal side, both on the revenue side, spending side, financing side, should be as clear and as credible as possible.”

Indrawati, 53, built a reputation as a technocrat and economic reformer when she was previously the finance minister, from 2005 to 2010. Following an opposition campaign accusing her and then-Vice President Boediono of abusing their authority, she left to join the World Bank as one of three managing directors.

Her return to the helm of the Finance Ministry last month was lauded by investors as adding impetus to the economic plans of President Joko Widodo, known as Jokowi.

Tax Amnesty

She will help steer a tax amnesty program that the government hopes will boost its coffers by as much as 165 trillion rupiah ($12.5 billion) this year. Indonesia has one of the lowest tax-collection rates in the region: In 2014, just 900,000 Indonesians submitted returns.

“We’re improving ourselves, but if you’re not compliant, I’m going to take it very seriously,” she said, referring to those who don’t pay their taxes. “Serious action, domestically as well as internationally. It’s about time for Indonesia to have this compliance level from all parties.”

An Organisation for Economic Cooperation and Development official criticized the amnesty program this week, saying it risks favoring tax cheats and punishing payers. Those who have already declared their assets and paid their taxes will have ended up being treated unfavorably by comparison, said Philip Kerfs, head of international cooperation in the OECD’s Centre for Tax Policy and Administration.

Jokowi aims to boost economic growth to 7 percent during his term, in part by spending billions of dollars on rail, road and port projects. A tax-to-GDP ratio at around 11 percent and sliding commodity prices have put that goal out of reach for now. A draft state budget handed down earlier this week forecasts growth of 5.3 percent next year -- a notch above the 5.2 percent estimate for 2016.

“It’s not acceptable for a country like Indonesia to have a tax ratio which is very low,” Indrawati said. “This is not because we are poor, this is not because we don’t have business people, but it’s because both sides, the taxpayers as well as the government, have not been able to establish a good relationship based on trust, confidence and credibility.”

Among her main challenges will be financing the infrastructure program in the face of a tax shortfall and widening budget deficit. The government is forecasting a fiscal shortfall of 2.5 percent of gross domestic product this year, close to the 3 percent mandated ceiling, prompting Jokowi to call for spending curbs.

Indrawati indicated that the ceiling would remain for now.

"I think it still fits well today," she said.

Weaker Demand

Indonesia has struggled to meet its revenue target on the back of weaker-than-expected global demand for commodities and a slowdown in China, its top export market. China accounted for about 25 percent of Indonesia’s coal exports last year.

Any shortfall that can’t be explained by these factors must be due to the ministry’s inability to collect taxes, Indrawati said. She pledged to address Indonesia’s complicated procedures and high tax rates compared with neighboring countries.

Jokowi said this week that he wants to accelerate development across the Indonesian archipelago -- a string of more than 17,000 islands that would stretch almost from New York to London -- in an effort to lift a vast number of the population of more than 250 million out of poverty.

“In the year of development acceleration, the government is focusing on three breakthrough measures to eradicate poverty, unemployment and social inequality,” he said. “Those three measures are: One, expediting infrastructure development. Second, preparing productive capacity and human resources. Three, deregulation and de-bureaucratization.”

http://www.bloomberg.com/news/artic...wati-aims-to-build-trust-to-boost-tax-revenue

 

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